Race to Reform

CFO Bob Davis and his cohorts have nine months left to clean up Computer Associates.

Meanwhile, CA is laboring under the watchful eye of an overseer. The DPA specifies that CA’s rehabilitation is subject to the scrutiny of a court-appointed independent examiner, Lee S. Richards. A partner in the law firm of Richards Spears Kibbe & Orbe LLP in New York, Richards, who declined to be interviewed for this article, maintains an office at CA’s headquarters. His reports to the board, the court, and federal agencies are confidential. CA would not disclose what, if any, recommendations he has made to the new executive team.

CA also must mend its reputation with customers, shareholders, and Wall Street. One of its largest institutional investors is Private Capital Management LP, a unit of Legg Mason, which holds 11.6 percent of CA and has been accumulating shares since 2000. The money manager made headlines recently by forcing Knight Ridder, the newspaper chain, to put itself up for sale. Through a spokesman, PCM declined to comment on CA. CA still faces the wrath of other angry shareholders who have filed lawsuits against the company, among them Texas billionaire Sam Wyly.

So the job is a risky bet for Davis. After all, the finance department was the scene of the crime — and the cover-up — at CA. Much of the work of rehabilitation rests squarely on his shoulders. If successful, the financial payoff could be big. CA lured Davis with a signing bonus of $275,000. His base annual salary is $525,000. If he meets certain targets, he will earn a bonus in his first year of $525,000. CA also has promised him $2.2 million in long-term incentives such as stock options and restricted stock. But Davis says the move wasn’t just about the money. “It was frankly about the opportunity,” he says. “There was limited opportunity to move up at Dell.”

Still, colleagues were surprised when he took the job. James Schneider, CFO of Dell and his former boss, admits he was baffled when Davis announced he was leaving Dell for CA. Davis is “a good, solid guy,” says Schneider, “but I wouldn’t have thought of him as a risk-taker.” (Dell had been very generous with Davis. He made approximately $3.1 million by cashing in his stock options in 2003 and 2004.)

Building a Strong Team

Known for his technical accounting skills, Davis began his career at PricewaterhouseCoopers LLP in 1980, working on audit and regulatory matters in Washington, D.C. After getting his MBA at Columbia Business School, he joined MCI as senior manager in the corporate controller’s group in 1994. Schneider, who was also at MCI at the time, says that he would often pull Davis in to work on projects for him, although Davis did not report directly to him. Schneider left to join Dell in 1996. Several months later, Davis, in pursuit of fresh challenges, joined Dell as vice president of worldwide finance and planning for the enterprise systems group.

At Dell, Davis rose through the ranks to become chief accounting officer in part by contributing to the company’s famously disciplined growth strategy. “When I look at who really helped us get to where we are, Bob is one of the core guys,” says Schneider. Among other things, Davis installed sophisticated software systems that provided top executives with detailed financial data so they could make better strategic decisions for Dell.

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